Carrizo sells Barnett Shale assets to KKR for $104M

By Oil & Gas Financial Journal staff

Houston-based company looks to focus on liquids-rich Eagle Ford, Niobrara

Houston-based Carrizo Oil & Gas Inc. (NASDAQ: CRZO) has agreed to sell nearly all of its Barnett Shale Tier 1 properties to KKR Natural Resources, the partnership formed between an affiliate of Kohlberg Kravis Roberts & Co. LP (KKR) and Premier Natural Resources, for $104 million. 

Private equity firms, like KKR, are part of seven factors driving shale, according to Don Warlick of Warlick International. In mid-2009, KKR invested $350 million into privately-held, Marcellus shale player East Resources, which sold to Royal Dutch Shell for $4.7 billion just over a year later. In June 2010, KKR announced plans to spend near $400 million in a partnership to develop Eagle Ford properties with Hilcorp Energy Co.

In the Carrizo/KKR deal, roughly 13,000 acres will be sold, to include 75 gross (58.5 net) wells currently producing at an approximate gross rate of 15.7 MMcfe per day (8.3 MMcfed net), putting the price tag near $12,500 per flowing mcfe, according to a Jefferies & Co. Inc. report released after the announcement. An attractive price that compares favorably to Range Resources’ sale of Barnett assets for $8,000 per flowing mcfe in March, Jefferies continued.

Estimated proved reserves associated with the divested properties amount to 122.4 bcfe, 55% of which are proved undeveloped, as determined by Carrizo's third party engineers at year-end 2010.

Carrizo plans to pay off part of its credit facility, estimated near $155 million outstanding as of March 25, with the net proceeds. The company expects to use the resulting additional capacity under its revolving credit facility to fund, in part, its 2011 capital expenditure plan, and for general corporate purposes.

Carrizo president and CEO S. P. "Chip" Johnson, IV commented on the sale, "Our plan to focus our Barnett Shale development drilling on our Core properties in Tarrant County and our success in the initial development of our liquids-rich Eagle Ford Shale and Niobrara resource plays made our Tier 1 Barnett property a candidate for divestiture.”

An estimated borrowing base of $350 million, and over $400 million in 2012 cash flow following a pay-down of its North Sea Huntington development financing arrangement with BNP Paribas and Societe General, would allow the company the ability to add rigs to both liquids-rich plays. 

Sale of the Barnett assets is expected to close in mid-May.

Related Articles

Baird expands energy research platform

10/16/2013 Baird, an employee-owned, international financial services firm, has added senior analyst Daniel Katzenberg who expands the firm’s exploration & production (E&P) equity research coverage. S...

TPH and V&E host JV summit

10/10/2013

Energy corporates, NOC reps, and others gathered to share experiences

TPH and V&E host successful JV summit

09/25/2013 Energy companies and their joint-venture partners are honing deal structures to address new opportunities and lessons learned as the market for North American energy matures, speakers told attendee...

EV Energy Partners acquires Barnett Shale property

09/11/2013 EV Energy Partners LP reports that, along with certain institutional partnerships managed by EnerVest, Ltd., has signed an agreement to acquire natural gas properties in the Barnett Shale from Carr...

Carrizo to sell off Barnett Shale assets, focus on oil

09/06/2013 Carrizo Oil & Gas has agreed to sell off horizontal drilling assets in the Barnett Shale, East Texas and the Marcellus Shale for $268 million in order to repay debt and redeploy capital into it...

More Oil & Gas Financial Articles

Baird expands energy research platform

Wed, Oct 16, 2013

Baird, an employee-owned, international financial services firm, has added senior analyst Daniel Katzenberg who expands the firm’s exploration & production (E&P) equity research coverage. Senior analyst Dan Leben has initiated research coverage on the oilfield services and equipment sector

TPH and V&E host JV summit

Thu, Oct 10, 2013

Energy corporates, NOC reps, and others gathered to share experiences

TPH and V&E host successful JV summit

Wed, Sep 25, 2013

Energy companies and their joint-venture partners are honing deal structures to address new opportunities and lessons learned as the market for North American energy matures, speakers told attendees at the Tudor, Pickering Holt & Co. and Vinson & Elkins Joint Venture Summit Sept. 5 and 6 in Houston.

EV Energy Partners acquires Barnett Shale property

Wed, Sep 11, 2013

EV Energy Partners LP reports that, along with certain institutional partnerships managed by EnerVest, Ltd., has signed an agreement to acquire natural gas properties in the Barnett Shale from Carrizo Oil and Gas Inc.

Carrizo to sell off Barnett Shale assets, focus on oil

Fri, Sep 6, 2013

Carrizo Oil & Gas has agreed to sell off horizontal drilling assets in the Barnett Shale, East Texas and the Marcellus Shale for $268 million in order to repay debt and redeploy capital into its Eagle Ford operations. An affiliate of EnerVest Ltd. has reportedly snapped up the Barnett Shale assets, but Carrizo did not disclose the buyers of either the Marcellus Shale assets or the East Texas assets.

Most Popular

Oil & Gas Jobs

Search More Job Listings >>
Subscribe to OGFJ